I think you make a good point about complex manufactured goods like cars - the long-run market entry conditions will be a lot different than carrots! Two reasons why goods that have high barriers to entry still don't need to be protected from dumping:
First, to my knowledge, the feared end result of high prices and no remaining domestic industry that began by dumping has never occurred. Do you know of an example where it has? Can you give a real-life example of a country where an industry a) received large government subsidies b) sold abroad below cost c) destroyed foreign competition d) increased prices and e) left foreigner consumers with high prices and no domestic option.
Second, say that a Nigerian firm can produce cars equivalent to their American counterparts at 80% of the price. According to fair trade proponents, if the reason the Nigerian cars are 80% of the American price is because of dumping, then the American government should put tariffs on Nigerian cars to prevent the end result described above. My question is, "Why does it matter why the cars are cheaper?" If it helps the American economy in the long-run to put tariffs on the artificially cheaper Nigerian cars, then it should also help the American economy to put tariffs on organically cheaper Nigerian cars, i.e. Nigerian cars that are 80% of the American price because of lower costs, not government subsidies. If tariffs are being put into place because foreign competition is cheaper, it's just good old protectionism.
Being in favor of tariffs just because foreign goods are cheaper is simple protectionism. Which is a position many people take, but it shouldn't be dressed up as being compatible with free trade.
You make a fair point about organically vs artificially cheaper foreign goods - without detailed industry data it's unreasonable to ask anyone to know what's happening.
However, your examples of cars, computers, and microwaves all fail condition (e) spectacularly. Computers and microwaves sell at a fraction of the price today, when most are imported, then they did when they were made domestically. Even cars, once you account for the increase in quality, are much cheaper now then they were in the 1960s. I'm currently driving a 16 year old imported car with 155,000 miles. Brand new that car sold for about 60% of the median salary of a full-time working American. It has AC, heated seats, nice sound system, and a high safety record. I can reasonably expect it will make it to 200,000 miles without becoming a money pit. That would be a fantasy for a worker in the 1980s, let alone the 1960s.
Well the good news is we are about to find out who is right. If tariffs are good, the economy will grow quickly as manufacturers will start building factories and existing factories will start hiring more workers. The US economy will expand, prices will drop, and salaries will increase.
What are your thoughts on reciprocal tariffs that Trump has enacted today?
The next two posts will be about just that.
I think you make a good point about complex manufactured goods like cars - the long-run market entry conditions will be a lot different than carrots! Two reasons why goods that have high barriers to entry still don't need to be protected from dumping:
First, to my knowledge, the feared end result of high prices and no remaining domestic industry that began by dumping has never occurred. Do you know of an example where it has? Can you give a real-life example of a country where an industry a) received large government subsidies b) sold abroad below cost c) destroyed foreign competition d) increased prices and e) left foreigner consumers with high prices and no domestic option.
Second, say that a Nigerian firm can produce cars equivalent to their American counterparts at 80% of the price. According to fair trade proponents, if the reason the Nigerian cars are 80% of the American price is because of dumping, then the American government should put tariffs on Nigerian cars to prevent the end result described above. My question is, "Why does it matter why the cars are cheaper?" If it helps the American economy in the long-run to put tariffs on the artificially cheaper Nigerian cars, then it should also help the American economy to put tariffs on organically cheaper Nigerian cars, i.e. Nigerian cars that are 80% of the American price because of lower costs, not government subsidies. If tariffs are being put into place because foreign competition is cheaper, it's just good old protectionism.
Being in favor of tariffs just because foreign goods are cheaper is simple protectionism. Which is a position many people take, but it shouldn't be dressed up as being compatible with free trade.
You make a fair point about organically vs artificially cheaper foreign goods - without detailed industry data it's unreasonable to ask anyone to know what's happening.
However, your examples of cars, computers, and microwaves all fail condition (e) spectacularly. Computers and microwaves sell at a fraction of the price today, when most are imported, then they did when they were made domestically. Even cars, once you account for the increase in quality, are much cheaper now then they were in the 1960s. I'm currently driving a 16 year old imported car with 155,000 miles. Brand new that car sold for about 60% of the median salary of a full-time working American. It has AC, heated seats, nice sound system, and a high safety record. I can reasonably expect it will make it to 200,000 miles without becoming a money pit. That would be a fantasy for a worker in the 1980s, let alone the 1960s.
Well the good news is we are about to find out who is right. If tariffs are good, the economy will grow quickly as manufacturers will start building factories and existing factories will start hiring more workers. The US economy will expand, prices will drop, and salaries will increase.
I'm not holding my breath.